By Jacob Sonenshine

The price of oil has caused some stock market volatility, but it's not at a level that's causing a lot of problems. But there is a number that could send shock waves through Wall Street.

Oil is at $78 per barrel, about 13% above its 24-month moving average -- essentially a two-year average -- of $69. Historically, when the commodity is that amount above the average, the S&P 500 goes on to see a return in the mid single-digit percentages for the following 12 months, according to Evercore data.

The data show that stock returns turn negative for the following year when oil approaches roughly 35% above the moving average. That would be a price of about $93, and for now it's a long way away from reaching that level.

Oil prices have become a focus since the U.S. started military strikes targeting Iran. WTI Crude oil is up 15%, to just over $78, since the war began.

Energy prices are a single-digit percentage of the entire Consumer Price Index, so oil and gas prices today won't cause massive inflation. Also, oil prices have only been up at current levels for a few days, so if they drop, the average oil price over this period won't be quite so high anyway.

That's why the length and intensity of the war matters: the worse the situation gets, the more likely it is that oil supplies are disrupted and oil remains at current levels, or shoots higher.

One important factor will be how long shipping traffic is disrupted through the Strait of Hormuz. Tons of oil moves through that region to various areas of the globe, so if the flow is restricted, supplies would drop and the price would rise.

At the moment, the stock market has other issues on its radar. Private credit has become a concern, as Wall Street monitors the extent to which bad credits could bring down certain funds. Questions remain about the viability of many software companies in the face of artificial intelligence offerings from Anthropic and Claude.

For now, when stock investors generate their lists of things to worry about, oil shouldn't be at the top. But it's something to monitor.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 05, 2026 11:48 ET (16:48 GMT)

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